It is. I've played on both modern ligthening cabs, and on a variety of old official hardware setups in the CRT and Twinkle era. I'd rather play on a Lightening.

Specifically there is a source of lag even greater than the display lag introduced on almost all of the official LCDs. The input lag, or lag between a button being pressed and the game engine registering the input, is critically important in keysounded rhythm games. The bio2 board introduced in the IIDX25 hardware upgrade made a bigger reduction of this lag than the lag that was introduced in official LCD monitors.

The "custom hardware" or Twinkle system used by Konami for IIDX 1-8 is essentially modified PS1 hardware. It's really not much different than building ontop of Windows Embedded with the amount of custom hardware inside the cabinets.